Bonds are fixed-income instruments where issuers borrow funds and pay coupon interest. Returns depend on coupon, purchase yield, maturity, credit quality, and interest-rate movement.
Government vs corporate bonds
- Government securities carry sovereign backing with duration risk
- Corporate bonds add credit spread and issuer risk
- Tax-free or taxable structures differ by issuance and regulations
Coupon vs yield
Coupon is stated interest on face value; yield reflects your actual return at market price. Buying above or below face value changes effective return.
Key risks to monitor
- Interest-rate risk: longer duration is more price-sensitive
- Credit risk: issuer downgrade/default can affect value
- Liquidity risk: exit may be harder in thinly traded bonds
Portfolio role
Bonds can improve stability and predictable cash flow in diversified portfolios. Match bond duration and credit profile with your goal timeline and risk tolerance.
Disclaimer
Aroundu Wealth Capital provides educational information and advisory support. Bond investments are subject to market and credit risks. Read offer documents and risk disclosures carefully.